From democracy to high-tech entrepreneurship

Abstract Democracy is increasingly viewed as a core institutional condition for entrepreneurship, yet evidence remains mixed on what types of entrepreneurial activity it shapes and how. This study develops and tests a differentiated framework linking improvements in electoral democracy to two outcomes: total early-stage entrepreneurial activity (TEA) and high-tech entrepreneurship activity. Using data on 81 developing and developed countries over 2000–2022 we extend the democracy–entrepreneurship literature by moving from the general question of whether democracy fosters entrepreneurship to whether it is TEA or high-tech entrepreneurship which democracy affects. We also argue that democracy shapes entrepreneurship activity through institutional mechanisms of property-rights protection and government size. Our findings demonstrate that linear improvements in democracy are not directly associated with TEA and high-tech entrepreneurship. Property rights are positively associated with high-tech entrepreneurship, but that they do not moderate the democracy–high-tech entrepreneurship relationship.